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Labor Planning for the Omnichannel Experience

November 14, 2018

By Bob Clements

As consumers add more smartphones, tablets and computers into their day-to-day living, retailers are expected to keep pace by providing innovative ways to shop. Though many are offering varying degrees of omnichannel experiences to their customers, they continue to struggle when it comes to linking their online and brick-and-mortar store presence.

A well-executed omnichannel strategy provides the customer with a seamless shopping experience across multiple channels. In general, omnichannel requires a number of fairly complex processes to make it successful. First and foremost, you need to have a great order management system and supply chain system so you know where the inventory is, who’s ordering, where to ship and so on. The impact of omnichannel in the stores themselves is pretty simple in concept but difficult in execution. While omnichannel has a lot of potential down the road, in stores today you typically focus on these three types of transaction:

Buy online and pick up in store – this is the perfect way to drive traffic to the store as it gives employees the opportunity to up-sell

Buy in store and ship home – where you don’t have the merchandise in the store and so you’re saving the sale

Buy online and ship from store – this is where the store acts as your warehouse or distribution center

Today, retailers are at different stages of how they provide the omnichannel experience to their customers. As a relatively new way of shopping and with its varying flavors, it’s difficult to know what impact it will have on labor and the work that goes on in stores. No matter what the mode of shopping the customer is taking advantage of, the experience should be seamless on the part of the retailer—so managing labor properly is essential.

Where retailers struggle with omnichannelEach buying experience comes with its own set of challenges. Whether a customer buys in the store or online, your associates have to be ready to handle that transaction. For example, if a customer places an order online to pick up at the store, that customer expects the product to be waiting for them when they show up. So, it’s your job to know how quickly the product has to be ready to go, where to put the order so they can claim it without delay, how much up-selling and cross-selling you want to do, and so on. Defining the process is key and is where a lot of retailers have trouble.

Many retailers tie labor budgets to sales. In these cases, stores need to get credit for omnichannel sales so that they have labor available. Even more effective, is having the right labor model in place. Retailers have to stop thinking about labor and sales being tied together and start thinking more about the things that drive labor in the stores – customer traffic and transactions. So then, if you’re looking at the right drivers, you’ll have different labor standard for instore transactions versus omnichannel transactions and your labor will be accounted for correctly.

Similarly, because omnichannel transactions are new, they’re difficult to forecast since today’s forecasting algorithms are really dependant on historical data. There’s no sure answer to solving this forecasting dilemma, but to start you need to pinpoint why you’re doing omnichannel in the first place and a create a business case that supports it. For the time being, you should give your stores a little bit of wiggle room in their budgets so managers can plan for these transactions until you’re able to collect some historical information.

Accommodating both regular and omnichannel transaction all comes down to finding the right balance of labor. Axsium has helped a number of retailers navigate these challenges and we know there’s not a one-size-fits all approach. Your solution to these challenges is dependent on your corporate culture and the type of brand experience you want to offer your customers. With the right labor standards in place against each transaction model, retailers can effectively plan for and support omnichannel sales.